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Jennings v. Studebaker Sales Corp.

Decided: February 2, 1934.

ARTHUR B. JENNINGS, RECEIVER OF BROADNEY CORPORATION, PLAINTIFF-RESPONDENT,
v.
STUDEBAKER SALES CORPORATION OF AMERICA, A CORPORATION, DEFENDANT-APPELLANT



On appeal from the Supreme Court.

For the appellant, McCarter & English.

For the respondent, Arthur T. Vanderbilt (Nathan L. Jacobs, on the brief).

Brogan

The opinion of the court was delivered by

BROGAN, CHIEF JUSTICE. This appeal concerns two cases that had the consideration of the trial court at the Essex County Circuit of the Supreme Court. In each case, the plaintiff, Arthur B. Jennings, as receiver of the Broadney Corporation (formerly Ira C. Jones Company), brought suit against the Studebaker Sales Corporation of America, in the first, to recover money said to have been unlawfully paid to the defendant corporation and in the second to recover money alleged to be due from the defendant to the said Broadney Corporation.

The cases will be considered in the order of their presentation.

First case.

Between June 22d, 1929, and December 28th, 1931, the Ira C. Jones Company (now the Broadney Corporation, in the hands of a receiver) paid out by check, at different times, to the defendant the sum of $27,000 which the plaintiff charges the defendant received for the use and benefit of the Jones company in effect alleging the defendant was a constructive

trustee. The complaint alleges that Mr. Jones, who controlled the Ira C. Jones Company, caused these moneys to be paid to the defendant out of the corporate funds, on account of his personal indebtedness to the defendant, Studebaker Sales Corporation of America, and that the defendant received this money, converting it to its own use, well knowing that it was the money of the Jones company, and not the money of Jones, individually.

Defendant admits receipt of $27,000 and seeks to justify the payments on the ground that this sum in turn was charged against Mr. Jones on the books of the Jones company; that it represented interest on the sum of $150,000 which the defendant had loaned to Mr. Jones on his note, claiming that the money was used in the business of the Jones company.

The defendant also filed a counter-claim saying that on January 2d, 1931, Mr. Jones delivered to it, his promissory note in the sum of $150,000; that on that date Mr. Jones and the Jones company, as first party, entered into an agreement with the defendant, as second party, reciting that the sum of $150,000 was loaned to Jones by the defendant, for the purpose of being used in the business of the Jones company, and that said loan would be paid not later than October 31st, 1931, that payment had not been made and that there was a balance due of $129,030.15 which the defendant claimed as damages on the counter-claim. Parenthetically, it should be observed that the loan was actually made to Jones on January 2d, 1929, and that the note of January 2d, 1931, was a renewal.

Motion was made to strike out the answer and counter-claim as sham and they were stricken and judgment entered in favor of the plaintiff and against the defendant for the amounts so paid with interest, totaled $31,428. The defendant appealed from this final judgment on the ground that the court erred in striking out the answer and counter-claim and in entering judgment for the plaintiff.

The appellant's position in this court is predicated on three points. First, that the affidavits submitted in support of the answer raised fact issues ...


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